**[investwise]** Gold Is Finally Doing What It Should, But It Must Break Free Above $1220/oz.

 

But now Gold's finally doing what it's supposed to Yesterday, we saw something different. As Greece was downgraded, stocks collapsed but gold actually shot up, by some $25. It was finally doing what it's 'supposed to'. And it shouldn't be any great surprise. This is the perfect storm for gold. Unlike the 2008 credit crisis, where the problem was largely one of private debt and liquidity drying up, now the issue is sovereign debt. This is a different beast altogether. And the fear already seems to be spreading. Portugal is next. But are the finances of Britain or France or, for that matter, the US in markedly better shape? In these circumstances, where's left for money to flee to? Gold's unique selling point is that it is nobody else's liability. That's what should make it an attractive buy when the world's financial system comes under this sort of stress. It's also worth noting that other 'hard assets' such as oil, silver and base metals actually sold off yesterday. Gold and the US dollar were the assets that money fled to. I have pointed this out before. It is unusual, but it is possible for gold and the US dollar to rise together. Did gold break free yesterday? One day does not a market make, but there is a good chance that yesterday will mark a major change in trend. It could be a top in stock markets – though I'm wary about making that call again. But if it is the day that gold finally breaks free, gold has to get above $1,170 an ounce and stay above that level, as the chart below shows.     Once we are through this resistance, gold can make an assault on its old highs and beyond. Safe Harbor Statement: Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints.   Nothing in this article is, or should be construed as, investment advice.

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